I had the pleasure of speaking with Insurance expert Mark Bergerson from the Arizona Group about Cyber Liability Insurance. Here is a summary of our conversation.
Cyber threats loom larger than ever, particularly for small and medium-sized businesses. Mark sheds light on why cyber liability insurance is not just a nice-to-have, but a must-have in safeguarding against potential cyber incidents.
What Is Cyber Liability Insurance?
Cyber liability insurance provides a safety net against various cyber threats, including social engineering, ransomware, and data breaches. As Mark explains, “Cyber liability insurance protects any business, small, medium, large, when an outside attack has happened on their computer system.” The coverage is broad and adaptable, addressing the diverse threats that modern businesses face online.
Why Small Businesses Are Vulnerable
Surprisingly, small businesses are often the prime targets for cyber-attacks. They are generally less protected yet hold valuable data, making them attractive to cybercriminals. Mark notes, “Over 63% of small businesses have had a cyber attack within the last three years.” Moreover, the fallout from these attacks can be devastating: “80% of those small businesses have gone under because they couldn’t afford the costs associated with the cyber attack.”
The Affordability of Cyber Liability Insurance
Dispelling common misconceptions about the cost, Mark emphasizes the value and affordability of cyber liability insurance. “It’s actually one of the best values in the industry,” he asserts. For example, small business owners can obtain significant coverage for less than a thousand dollars annually, which is a small price to pay for robust protection against potential financial catastrophes.
Coverage Details: Understanding What’s Included
Cyber liability insurance offers comprehensive protection across several key areas:
- First-Party Coverage: Helps your business recover from direct losses due to cyber incidents.
- Third-Party Coverage: Protects against damages if a partner or vendor’s breach affects your systems.
- Cyber Crime: Covers various cyber crimes, including ransomware, phishing, and wire transfer fraud.
Mark further illustrates the importance of this coverage with real-world scenarios, such as the major third-party breach incident involving a big national builder that was breached through a client – a commercial painter – which led to significant financial implications.
Exclusions and the Importance of Specific Policies
It’s crucial to understand what cyber liability insurance does not cover. Certain acts, such as illegal activities or misrepresentation on policy applications, can lead to denied claims. Mark advises, “You want a really broadening statement for a lot of those people so that as long as they don’t show that they tried to defraud the insurance company, they’re going to have insurance.”
The Cyber Trifecta: A Comprehensive Approach to Cybersecurity
To effectively guard against cyber threats, businesses should adopt a three-pronged approach:
- Cybersecurity Measures: Implementing strong cybersecurity protocols to prevent breaches.
- Cyber Liability Insurance: Financial backup to mitigate the costs associated with cyber incidents.
- Education: Training staff to recognize and avoid potential cyber threats.
This holistic strategy ensures that businesses are not only prepared to defend against cyber-attacks but also equipped to respond effectively should one occur.
Conclusion: The Non-Negotiable Need for Cyber Liability Insurance
In the face of increasing cyber threats, the necessity for cyber liability insurance is clear. As Mark states, “It’s not a matter of if you’re going to have an attack; it’s a matter of when.” For businesses, especially in the service sector, securing cyber liability insurance is not merely an option but an essential component of a comprehensive risk management strategy. This protection allows businesses to continue thriving without the looming threat of cyber disruptions.
Ready to protect your business? Contact Mark at mark.bergerson@arizonagroup.com or (480) 633-6695.
And of course, when you’re ready to protect your business from these threats, contact us to get a quote on an affordable yet robust Cybersecurity plan.
